Many Non-Resident Indians (NRIs) are now investing in properties in India as part of their globalization drive. Be it for own stay or as an investment, Indian property has become readily available via NRI home loans. Indian Banks and Financial Institutions have specific home loan product catering to the requirement of NRIs.
In this blog, we'll dive deep into the home loan process, covering the home loan eligibility criteria, required documentation, and special considerations that come with applying for an NRI home loan.
What is an NRI Home Loan?
An NRI home loan is a financial product that targets Non-Resident Indians who want to buy residential property in India. These loans can be availed by NRIs from Indian banks or housing finance companies at home loan interest rates which are very competitive. The loans could be used for different purposes like buying a new property, construction or renovation of the one existing.
Eligibility Criteria for NRI Home Loans
When you apply for an NRI home loan, you must fulfil the home loan eligibility criteria specified by banks or financial institutions. Here are few general requirements:
NRI Status: The applicant must be an Indian citizen residing outside India for employment or business purposes.
Age Limit: Most banks prefer applicants aged between 21 and 60 years, though this can vary.
Income Requirements: As NRIs earn in foreign currency, lenders assess the applicant’s monthly income, repatriation ability, and job stability. The minimum income requirement varies based on the country of residence and the bank’s policies.
Employment Status: Lenders typically prefer NRIs working in reputable organizations or having a steady income source from self-employment or business.
Credit Score: A good credit score is essential for loan approval. Lenders look for a strong CIBIL score and a clean credit history.
Property Eligibility: The property being purchased must be approved by the bank or financial institution. The property should have a clear title, and its documentation must be legally sound.
Documentation Required for NRI Home Loans
To process the loan application smoothly, NRIs are required to submit few documents. Below is the list of general documents required while you apply home loan:
Proof of Identity: Passport, PAN card, or any government-issued ID.
Proof of Address: Utility bills, rental agreement, or any proof of overseas residence.
Employment/Income Proof:
Employment contract
Latest salary slips
Overseas bank account statements for the past 6 months
Income tax returns (if applicable in the country of residence)
NRE/NRO Account Statement: A minimum of 6 months' bank account statements, reflecting income and expenses.
Power of Attorney (PoA): Most lenders require a PoA since NRIs live abroad. This allows a resident Indian to act on behalf of the NRI concerning loan-related activities.
Property Documents: Sale agreement, property title deeds, approved building plan, and No Objection Certificate (NOC) from the builder or housing society.
Special Considerations for NRI Home Loans
NRI home loans come with the same features as a regular home loan, however there are a lot of other special conditions that apply:
Loan Tenure and Amount: The loan tenure for non-resident foreigner is shorter typically as compared to a resident, it usually lies between 5 to 15 years. Also, the loan amount may depend on the applicant’s income and country of residence.
Interest Rates: NRIs can choose from fixed or floating home loan interest rates. Compare the rates offered by different lenders to get the best deal.
Repayment Options: In case of a housing loan an NRI has to buy Indian Rupees via their NRE (Non-Resident External) or NRO (Non-Resident Ordinary) accounts. In this way the repayment comes under the purview of FEMA regulations.
Currency Fluctuation Risk: NRIs earn in foreign currency and repay loans in INR; hence, they are exposed to exchange rate fluctuation risk. If foreign currency weakens against INR, there can be an increase in EMI burden.
Tax Benefits: For NRIs, tax benefits can be enjoyed almost at par with resident Indians. Deductions can be claimed on interest payments under Section 24(b) and are also on the principal amount under Section 80C of the Income Tax Act, 1961.
Down Payment: Most banks ask NRIs to pay a higher down payment (usually 20-30%) as compared to resident Indians.
Legal Compliance: NRIs should follow FEMA guidelines while investing in real estate in India. It’s always better to consult with legal expert to ensure all rules are followed.
Final Words!
Investing in property in India as an NRI is an intelligent financial decision. Getting NRI home loans is easier than ever with Ruloans- Ruconnect App, India’s First B2B Loan Distribution Channel Partner App. With easy home loan eligibility, minimal documentation and a host of other benefits exclusively meant for NRIs, Ruloans ensures complete ease.
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